building strengthening - pmi

2 0 1 0 A n n u A l R e p o R t

&Building Strengthening our gloBal Community

ContentsStakeholder letter 1

Strengthening our Global Community 2

2010 pMI Global leadership 12

Financial Statements pocket

stakeholder letter

It’s not always easy for project management practitioners —immersed in the day-to-day responsibilities within their own organizations—to recognize the extraordinary developments taking place in the global project manage-ment community. We at PMI are in a unique position to witness the collective achievements of project profession-als and project management-minded organizations across the globe. The project management world is poised to help organizations succeed like never before.

For project professionals, companies, consultan-cies, government organizations and not-for-profits alike, 2010 was truly a year of strengthening and expanding the global project management community. Organizations in all sectors, from all corners of the earth, are making standardized project management a priority.

That commitment is evident in the involvement of the 51 organizations in the PMI Global Executive Council, formed in 2010. Through the Council, these large mul-tinational and government organizations are identifying opportunities for process improvements, exchanging best practices and increasing the number of successful projects.

Project practitioners at every level also did their part to elevate the profession. The finalists for the 2010 PMI Project of the Year Award are just three remarkable examples of project management at its best. Yet they were hardly alone. Hundreds of thousands of other projects delivered outstanding business results in 2010 because of a commitment to excellence in project management.

Supporting the growth

PMI continues its pledge to help sustain the growth of the profession. That pledge, of course, can only be fulfilled with constant, generous support from our volun-teers—the lifeline of the Institute.

Along with championing project management and working to improve project results at their own organiza-tions, these volunteers put in extra hours, whether it’s helping develop standards or serving as a mentor. That’s because they see the bigger picture: a stronger global

project management community with a power that tran-scends any one organization, region or sector.

With the support of our enthusiastic, hard-working volunteers, in 2010 PMI: n Opened a new office in Australasia and a second office

in China to support regional governments and local organizations

n Launched 10 new chapters around the world to enable enhanced networking and knowledge-sharing at the local level

n Published the Practice Standard for Project Estimating, in addition to many other publications

And there’s no doubt that PMI will continue to be the premier global advocate for our profession under the leadership of new president and CEO Mark A. Langley, who successfully transitioned to the role upon the retire-ment of Gregory Balestrero in 2010.

the outlook

Strengthening and expanding the global project man-agement community wasn’t simply a goal for 2010 alone. If it were, our work would be done. On the contrary, our efforts will carry over into 2011 and beyond. We in the global project management community are not at the peak of a mountain, nor are we at the finish line of a race. Instead, we find ourselves on a steady incline, constantly and collectively enhancing our knowledge, experience and relationships.

At PMI, we see a future where organizations advance by successfully completing their most important initia-tives. And as the profession continues to grow and mature, PMI will strive to support organizations, our members and certification holders worldwide as they rely on project management to deliver a competitive edge.

Eugene (Gene) Bounds, PMPChair, 2010 PMI Board of Directors

to our Pmi memBerS, Credential holderS and ColleagueS,

yeAR In RevIew 1

serving on the Board, leading chapters and contributing to the PMI communities of practice.

PMI has done—and continues to do—its part as a responsible member of the community through support of the PMI Educational Foundation, which promotes economic, educational, cultural and social advance-ment through project management. The Foundation awards scholarships, confers honorary awards, undertakes research, prepares and disseminates project management-related educational information, and offers financial grants to support project management life skills-related projects.

As we move into the new decade, there will be no limit to what project professionals, companies, consultan-cies, government organizations and not-for-profits can achieve together.

organizationS FortiFy their Commitment

to projeCt management

In 2010, businesses and governments across the globe saw the value of project, program and portfolio management —and reinforced their commitment to it. They realize project management is more than a tactical competency focused primarily on process. Whether large or small, and regardless of sector, organizations understand the profession delivers a competitive advantage by producing

2 pMI 2010 annual report

oOvEr THE YEArS, the project management profes-sion has come together to achieve a collective purpose. The goal: expand and strengthen the global project man-agement community—not for the benefit of one industry or one geographic region, but to inspire organizations around the world so they embrace, value and utilize proj-ect management and attribute their success to it.

Organizations of all types and individual practitioners from every sector kept this goal front and center in 2010. Through collaboration, knowledge sharing and a focus on education, training and certification, the global community continues to ensure project management is understood, recognized and respected worldwide.

There was no better time for such a significant and distinguished goal, as organizations and individuals tran-sition from recession to recovery.

With more than half a million members and cre-dential holders around the world, PMI has provided resources, support and advocacy to help organiza-tions, governments and practitioners maintain their momentum. And for those individuals who continued to struggle, PMI waived membership fees for its unem-ployed members.

This spirit of giving was evident across the project management community as well. volunteerism was a top priority, with members helping develop standards,

strengthening our global Community

yeAR In RevIew 3

positive outcomes, including increased efficiencies, organizational alignment, stakeholder satisfaction and improved decision making.

Part of the understanding comes from data showcas-ing the value of project management and its best prac-tices. To that end, PMI maintained its focus on project management research in 2010.

Since 1997, the PMI research Program has invested more than US$16 million in research dedicated to the profession. These academic research projects, confer-ence papers, symposia, poster presentations and surveys not only inform the practice of project management, the real-world applications of the results by organizations around the world spark further research as well.

PMI’s academic research, along with PMI’s ongoing market studies, such as the Pulse of the Profession report, is starting to demonstrate exactly how much project management, in all its forms, can deliver to organizations.

The Pulse of the Profession study, now conducted annually, continued to point to the value of project man-agement as a strategic business driver for organizations that use it effectively.

The research showed that three-fifths of organizations now have a PMO, and the activities of PMOs are becom-


academic research titles published in 2010

n The Project Management Office — Brian Hobbs, phD, pMp, and

Monique Aubry, MpM

n Learning for Success: How Team Learning Behaviors Can Help

Project Teams To Increase The Performance Of Their Projects —

peter Storm, phD, Chantal Savelsbergh, phD, and

Ben Kuipers, phD

n Earned Value Management: A Global and Cross-Industry

Perspective on Current EVM Practice — lingguang Song, phD

n Early Warning Signs in Complex Projects — ole Jonny Klakegg,

phD, MSc; terry williams, phD, pMp; Derek walker, phD, MSc;

Bjørn Andersen, phD, MSc; and ole Morten Magnussen, phD, MSc

n The Mindset for Creating Project Value — thomas G. lechler,

phD, and John C. Byrne, phD

Selected market research Studies Conducted in 2010n Pulse of the Profession

n Successful Program Management Practices in the

U.S. Government

n Economic Pulse Analysis

n PMI.org Usability and Satisfaction Survey

n PMBOK® Guide 5th Edition Update Study

n Value-based Membership Segmentation Survey

n PM Network Readership Survey

n Agile Certification Concept Test

n Membership and Chapter Satisfaction Survey

n Continuing Certification Requirements (CCR) Update Survey

ing better defined. Seventy percent of organizations, with or without a PMO, use the PMBOK® Guide as a baseline standard. And mature organizations—those that have PMOs, provide ongoing training for their project management teams and use standard practices—perform better than their counterparts who don’t. Analysis of the data shows that low-performing organizations risk 72 percent of their project budgets on efforts that fail to meet objectives; high-performing organizations risk only 8 percent, representing a difference of US$2.7 million at risk per average size project.

Another PMI study, Successful Program Management in the U.S. Federal Government, which evaluated suc-cess factors in 40 programs across government agencies, showed that investing in project management yielded measureable results.

One specific example from The U.S. Army Corps of Engineers attributed cost reductions of 20 to 30 percent to using trained program managers and a more systematic approach to managing projects and programs.

The study identified four common factors in success-ful programs:

n active high-level executive support n comprehensive communication n stakeholder engagement andn agility.



pmi global executive Council

pMI and members of the influential Global executive Council

believe that project, program and portfolio management deliver

a strategic advantage that helps organizations do more with less,

meet their strategic objectives and avoid costly project failures.

this community of elite organizations works together to direct

the future of the project management profession, and ensure its

continued growth and success. In 2010, members included:

Accenture

BAe Systems

Bank of America

Barclays

BASF

Boeing

Booz Allen

Hamilton

Boston university

Citi (o&t)

Credit Suisse

CSC

Dell

Deloitte uK

Deloitte uS

eMC2

ericsson

Fujitsu

Ge energy

Hp

Huawei

IBM

ICF International

Infosys

IIl

Microsoft

nASA

nokia

oracle

pioneer Hi-Bred

pwC

p&G

Raytheon

Ricardo

Rio tinto

SAp

Siemens

u.S. Department

of energy

u.S. Federal Aviation

Administration

wells Fargo

Zte

yeAR In RevIew 5

PMI’s study showed that creating a culture of project management, combined with a foundation of technical expertise, drives program success.

Organizations continue to value the opportunity to learn from their colleagues. In 2010, 40 large mul-tinational and government organizations from across the globe came together as part of PMI’s new Global Executive Council. Through the Council, senior leaders responsible for project, program and portfolio manage-ment network and share with other leading decision makers. By exchanging best practices and lessons learned, they’re not only helping their own organizations achieve a competitive advantage, they’re contributing to a stronger global project management community.

This increased collaboration is steadily helping orga-nizations become more sophisticated in their project management practices. According to the 2010 Pulse of the Profession study, 19 percent of organizations report high maturity, up from 14 percent in 2008 and 11 per-cent in 2006.

Many organizations have even incorporated the role of chief project officer into their executive ranks, including Brazilian civil construction firm Clip Engenharia, U.S. research database provider LexusNexus and Austrian advertising company Out There Media. By adding CPO to the ranks of CEO, COO and CIO, organizations


growth of the project management office Companies from around the world and across sectors have

increasingly embraced the project or program management

office (pMo) to build their project management prowess.

According to the 2010 Pulse of the Profession study, 63 percent

of global organizations now have a pMo.

“the pMo is being recognized by a larger number of organi-

zations to be a project management business function structure

of increasing importance,” Rogério de Mello pires, pMp, corpo-

rate pMo, portfolio and program manager at Itaú unibanco in

São paulo, Brazil told PM Network in 2010.

As more companies adopt pMos, their roles are also

becoming better defined. According to the Pulse of the Profession

study:

n 79 percent of pMos are responsible for project

management standardization.

n 70 percent monitor project success metrics.

n 61 percent are responsible for program management.

For organizations such as the u.S. national Institutes of

Health, the pMo serves as a powerful force driving organiza-

tional strategy down into the trenches. there, monthly pMo

reports map how recently completed projects meet the agency’s

objectives.

At Brazilian mining company vale, the pMo acts as a bridge

between executives and project managers and their teams.

to help organizations looking to introduce a pMo, pMI pub-

lished The Project Management Office: A Quest for Understanding

in 2010. this title offers valuable insight on how to structure a

pMo and the functions it should serve.

Interactions and knowledge sharing that occur in many of

pMI’s Communities of practice, including the pMo Community,

also help bridge the critical organizational gap between delivery

and strategy.



Since the mid-1990s, the u.S. Department of energy (Doe) has

been on a mission to harness nuclear fusion as a clean, safe ener-

gy source. yet, while nuclear reactions occur frequently in active

stars, mirroring such a reaction in a lab would require nothing

short of “building a star on earth.”

the national Ignition Facility & photon Science Directorate

(nIF), located in livermore, California, uSA, gets them one giant

step closer to doing just that.

But merely opening the facility took nearly 13 years, more than

uS$3.5 billion and a massive restructuring of the project plan.

two years into construction, the project team forecasted

major scheduling delays and cost overruns. Casting a fresh eye on

the size and complexity of the task, a new senior management

team was established, the formal risk posture was reassessed and

a revised contingency level was derived.

to ensure the new plan could be executed, outside scientific

and technical reviews of the nIF’s cost and schedule risk were

conducted. the reviews found that the new project baseline was

sound, and that an earned value system of cost and schedule

management had been established and was maturing.

with methodology woes addressed, the project team could

focus on building the world’s highest-energy laser and larg-

est optical instrument. By the nIF’s official dedication in May

2009, the project team had revolutionized the manufacturing

of precision large optics, producing 1-meter (3.3-foot) plates of

laser glass that could be manufactured 20 percent faster, five

times cheaper and with higher quality. the team also developed

pulsed-power electronics, innovative integrated computer control

systems and advanced manufacturing capabilities.

Construction, assembly and installation of the special equip-

ment was completed uS$2 million under budget and three weeks

ahead of schedule, which earned the project high praise on the

executive level.

u.S. Deputy Secretary of energy Daniel poneman called the

nIF “an amazing accomplishment.”

“Just about every aspect of this project was unprecedented in

scope, scale and complexity,” he says. “It required groundbreak-

ing technological achievement every step of the way.”

ProjeCt management in aCtion

national ignition Facility, pmi 2010 project of the year

efforts and a dedication to professional development and knowledge sharing.

More than 6,000 volunteers were instrumental in bringing to life new programs and offerings that provide value to their fellow practitioners. Among their very important roles:

n Serving as PMI chapter leaders

yeAR In RevIew 7

help the rest of the executive suite prioritize projects and ensure strategic alignment.

It is no surprise, then, that organizational demand for strong project management practices continued to amplify over the last year. To meet this demand, PMI further expanded and updated its standards to ensure organizations’ project management frameworks are cur-rent and consistently applied. In the fourth quarter of 2010, PMI released the Practice Standard for Project Estimating, detailing the aspects of assessing resources, durations and costs, and explaining the concept of pro-gressive elaboration.

In addition, PMI established a core team to begin work on the fifth edition of A Guide to the Project Management Body of Knowledge (PMBOK® Guide), the enduring standard framework for organizations using various project management methodologies. Published in 12 languages and with more than three million copies in circulation, it ranks as one of the best-selling project management business titles in history.

praCtitionerS Build their SkillS and enriCh

the Community

PMI membership increased by more than 7 percent in 2010 to create a global community of more than 334,000 practitioners. Together, these members committed them-selves to the profession through extensive volunteer


Building Stronger ties with technology technology continues to play a vital role in connecting the

global project management community, with much more to

come from pMI. It doesn’t just facilitate communication and

collaboration among practitioners around the globe. It also

enables practitioners—tasked with ever-expanding responsi-

bilities and expectations—to work more efficiently and effec-

tively from home, at the office or anywhere else in the world.

with the introduction of project management mobile apps,

for instance, practitioners are no longer tied to their desks

or even laptops. In 2010, pMI launched its PM Network app,

enabling project professionals to access the latest trends, best

practices and case studies on their mobile devices.

Also this year, pMI introduced automatic professional

development unit (pDu) reporting at global congresses, mak-

ing it even easier and more convenient for practitioners to

catalog their professional development as they expand their

knowledge base.

and resources to help practitioners empower their careers in project management, whether they’re new profession-als or have decades of experience.

The year saw a con-siderable push for increased communi-cation and collabora-tion among practitio-ners—not just between team members, but also amongst the global proj-ect management com-munity. Modern practi-tioners don’t view shar-ing best practices and

lessons learned as losing a competitive advantage. Instead, they see open lines of communication as the key to strengthening and expanding the profession.

Increasingly, practitioners are leveraging technol-ogy platforms to do so. According to PMI’s 2010 Pulse of the Profession study, 76 percent use some form of online networking/collaboration to man-age projects. What’s more, 73 percent belong to an online PMI community, including 53 percent at PMI.org.

n Contributing expertise and knowledge to interest-based communities

n Writing, reviewing and verifying exam questionsn Providing feedback on a Member Advisory Group

(MAG)Members have access to an array of valuable tools

and benefits, including virtual communities, market and academic research, and print and online publica-tions. Also in 2010, PMI launched Career Central, a one-stop online hub for knowledge, connections



global membership in 2010 reached

334,019 a 7.85% increase over 2009.

even during a period of economic uncertainty for both organizations and practitioners, Pmi continued to serve new members and show strong growth.

yeAR In RevIew 9

To support that knowledge sharing, PMI launched 36 online communities of practice in 2010—helping con-nect members who share an interest in a specific industry or area of specialty, be it aerospace and defense, agile, troubled projects or utility. Additionally, 10 new chapters were founded. Today, PMI offers more than 250 chapters in 72 countries, enabling practitioners around the world to network and collaborate either virtually or face-to-face.

An increasing number of practitioners also took advantage of the more than 3,300 institutions around the world that teach 5,700 courses centered on project management principles and content. To ensure the knowledge they gain is even more relevant, many opted for specialized degree programs as a way to gain a focused edge in both the workplace and the job market.

the Dallas Cowboys of the national Football league (nFl) set a

lofty goal: Create the ultimate fan experience with an ultra-luxurious

new stadium.

Manhattan Construction Company of Dallas, texas, uSA, was

tasked with constructing the 100,000-seat capacity, uS$1.1 billion,

state-of-the-art facility that would house the franchise. the project

team faced ever-expanding scope creep while managing more than

100 subcontractors, 2,200 employees and vendors in 12 countries.

the team was also contending with one very engaged

stakeholder: team owner Jerry Jones.

only with meticulous planning and adherence to project

management principles was the team able to keep the sta-

dium construction on track.

early on, Manhattan Construction built significant lead-

time into each step in the schedule—with good reason. the

original design of the stadium went through 300 revisions,

with 5,500 clarifications made to the drawings. Scope creep

pushed the project budget up by uS$450 million during its

lifetime and increased the workload by 60 percent.

the team held weekly review meetings to coordinate

every aspect of the project and assess the impact of any

change to the original plan or scope. “the key to managing

a project like this is communication,” says Jack Hill, stadium general

manager and director of stadium construction at Cowboys Stadium.

“we spent a lot of time in meetings [because] we wanted to antici-

pate any cost or scheduling issues before they occurred.”

Juggling a multitude of tasks and workers required a disciplined

approach to project management. to ensure the project team didn’t

depart from its fundamental project management practices, a rigid

monitoring and controlling process was implemented. weekly meet-

ings were held on the job site to review progress reports of various

systems. Additionally, senior management reviewed the entire proj-

ect on a monthly basis.

In the end, the project team delivered as promised—satisfying Mr.

Jones as well as hundreds of thousands of fans.

strengthening our global CommunityProjeCt management in aCtion

dallas Cowboys Stadium, pmi 2010 project of the year Finalist

Schools are showing commitment to addressing this burgeoning demand for project management higher edu-cation. In 2010, the PMI Global Accreditation Center for Project Management Education Programs (GAC) accredited five additional programs to ensure practitio-ners receive quality education:

n The Master of Project Management program at the University of Sydney, Sydney, Australia

n The Master of Project Management program at the Kemmy Business School, University of Limerick, Limerick, Ireland

n The Master of Science in Information Technology program at the University of Maryland University College, Adelphi, Maryland, USA

n The Master of Science in Technology Management program at the University of Maryland University College, Adelphi, Maryland, USA

n The Master of Science in Management program at the University of Maryland University College, Adelphi, Maryland, USA

They joined a list of 69 GAC-accredited project man-agement degree programs at 29 universities in 11 countries.

Practitioners in 2010 also made obtaining and main-taining project management certifications a high priority.



It had been 25 years since a new hospital was constructed

in louisville, Kentucky, uSA. But after the eastern part of

Jefferson County experienced rapid growth, it was clear the

area desperately needed one.

And it wasn’t going to be just another hospital. norton

Healthcare budgeted uS$146.3 million for an entirely new-

concept 298,000-square-foot (27,685-square-meter) facil-

ity—with no traditional designs, programs or work processes

allowed.

one big change was the emphasis on peace and quiet

throughout the facility. wireless communication devices

replaced the traditional overhead paging system. In addition, the

facility was equipped with a state-of-the-art It system that con-

nected to other parts of the norton network.

to help prepare the staff to serve patients on day one, the

project team built mock rooms that allowed employees to

become familiar with the equipment and layout.

For all the pieces to come together, effective communica-

tion and trust had to be established from the start. “From our

very first meeting, we talked about how we work together as

a team,” says Janice weaver, pMp, associate vice president of

norton Healthcare’s enterprise program management office.

Mandatory, weekly project-integration meetings were imple-

mented for all 15-plus members of the project leadership team.

As the project lead, Ms. weaver offered support and made her-

self available to the entire team. “project managers knew that

they could come to me to be a resource in case they hit a road-

block that they could not resolve on their own,” she says.

with consistent communication among team members and

project leaders, the norton Brownsboro Hospital was delivered

on time and uS$2.9 million under budget.

ProjeCt management in aCtion

norton Brownsboro hospital, pmi 2010 project of the year Finalist

on our achievements and progress toward advanc-ing and strengthening the global project management profession. But now we are challenged with striking a bal-ance between enjoying the fruits of our labor and focusing on continuing improvements well into the future.

As both a global thought leader and knowledge resource for the profession, PMI will continue to advance project management by enabling individuals and organi-zations to deliver expected benefits and value.

rest assured, PMI will lend its support to practi-tioners and organizations alike, debuting new certifica-tions, offering innovative products, fostering collabora-tion and more. To maintain our current positive trajec-tory, we must remain united in our efforts as a global community. PMI transcends sectors and geographic boundaries, with the aim of advancing the profession and truly proving that project management is indispens-able to business results. PMI

yeAR In RevIew 11

PMI certifications at every level experienced significant growth, including:

n Project Management Professional (PMP)®: Increased 14.2 percent

n Certified Associate in Project Management (CAPM)®: Increased 29.3 percent

n Program Management Professional (PgMP)®: Increased 30 percent

To support the expanding group of certification holders—as well as other project professionals—193 new PMI registered Education Providers (r.E.P.s) were approved in 2010. Together, more than 1,400 r.E.P.s enhance the ongoing professional development and credential maintenance for the global project man-agement community.

a Stronger, Brighter Future For all

As we proceed through 2011, we can collectively reflect


to maintain our current positive

trajectory, we must remain united in

our efforts as a global community.


2010 pmi Board of directors

2 0 1 0 p m i B o a r d o f d i r e c t o r s a n d e x e c u t i v e m a n a g e m e n t g r o u p

executive management group

eugene (gene) Bounds, pMp, Chair

Beth partleton, pMp,vice Chair

peter monkhouse, BSc(eng), MBA, peng, pMp, Secretary/treasurer

Frederick a. arnold, pMp, pMI Fellow

yanping Chen, MD, phD, pMp

Shirley edwards, pMp

jane Farley, MSc, FpMInZ, pMp

deanna landers, MBA, pMp

louis j. mercken, MBA, pMp, pMI Fellow

jon mihalic, pMp

william moylan, phD, pMp Frank parth, MS, MSSM, MBA, pMp

Vijay prasad, MS, pMp kathleen romero, MBA, pMp

ricardo triana, pMp

mark a. langley, CpA, president & Chiefexecutive officer

lesley Bakker,vice president, Brand Management

john doyle, MBA, vice president, Finance & Administration

Steven Fahrenkrog, MS, pMp, vice president,Regional Development

lew gedansky, phD,vice president, Governance & executive programs

dorothy mckelvy, MA, SpHR, vice president, organization Resources & Development

william Scarborough,JD, vice president &General Counsel

Frank Schettini, mBa,vice president,Information technology

harry Stefanou, phD, vice president, Market & Business Development

Brian weiss, MBA, vice president,product Management

Global Operations Center14 Campus Blvdnewtown Square, pA 19073-3299 uSA+1 610 356 4600 (phone)+1 610 356 4647 (fax)[email protected]

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2010 Financial Statements

P R O J E C T M A N A G E M E N T I N S T I T U T E A N D S U B S I D I A R I E S

Table of Contents

INDEPENDENT AUDITORS’ REPORT 1

CONSOLIDATED FINANCIAL STATEMENTS

Statements of Financial Position 2

Statements of Activities 3

Statements of Cash Flows 4

Notes to Consolidated Financial Statements 5 - 9

FINANCIAL STATEMENTS 1

Board of Directors

Project Management Institute

Newtown Square, Pennsylvania

We have audited the accompanying consolidated statements of financial position of Project

Management Institute and subsidiaries as of December 31, 2010 and 2009, and the related con-

solidated statements of activities, and cash flows for the years then ended. These consolidated

financial statements are the responsibility of the Institute’s management. Our responsibility is to

express an opinion on these consolidated financial statements based on our audits. We did not

audit the financial statements of PMI Organization Centre Private Ltd, a majority-owned subsid-

iary in Mumbai, India, or PMI Project Management Technology Co., Ltd, a wholly-owned foreign

enterprise in Beijing, China, which statements report total assets of $1,524,270 and $539,256 as

of December 31, 2010 and 2009, respectively. Those statements were audited by other auditors

whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts

included for PMI Organization Centre Private Ltd., and Project Management Technology Co., Ltd,

are based solely on the reports of the other auditors.

We conducted our audits in accordance with auditing standards generally accepted in the United

States of America. Those standards require that we plan and perform the audits to obtain rea-

sonable assurance about whether the consolidated financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts

and disclosures in the consolidated financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating

the overall consolidated financial statement presentation. We believe that our audits provide a

reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other auditors, the consolidated financial

statements referred to above present fairly, in all material respects, the consolidated financial posi-

tion of Project Management Institute and subsidiaries as of December 31, 2010 and 2009, and the

consolidated results of its activities and its cash flows for the years then ended in conformity with

accounting principles generally accepted in the United States of America.

Elko & Associates Ltd

April 13, 2011

I N D E P E N D E N T A U D I T O R S ’ R E P O R T

2 PMI 2010 ANNUAL REPORT

P R O J E C T M A N A G E M E N T I N S T I T U T E A N D S U B S I D I A R I E S C O N S O L I D A T E D S T A T E M E N T S O F F I N A N C I A L P O S I T I O N

DECEMBER 31,

2010 2009

ASSETS

CURRENT ASSETS

Cash and cash equivalents $12,112,404 $15,130,396Investments 157,230,338 115,031,927Accounts receivable – net 1,556,237 1,286,230Prepaid expenses 1,661,986 1,666,490Inventory 661,151 843,714Due from related party - 33,115

Total Current Assets 173,222,116 133,991,872

PROPERTY AND EQUIPMENT

Land 792,689 792,689Buildings and improvements 3,928,185 3,928,185Leasehold improvements 6,510,532 6,517,941Office furniture and equipment 3,386,393 3,900,105Computer software and equipment 33,965,484 33,473,325Software development in process 602,243 261,612

Subtotal 49,185,526 48,873,857Less accumulated depreciation and amortization (30,417,081) (26,534,196)

Net Property and Equipment 18,768,445 22,339,661

LONG-TERM ASSETS

Investments – long-term fund 9,845,028 2,838,688Deposits and other assets 388,675 506,536

Total Long-Term Assets 10,233,703 3,345,224

TOTAL ASSETS $202,224,264 $159,676,757

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES

Accounts payable $6,577,555 $5,183,384Unearned revenue 28,063,837 25,179,625Accrued expenses 951,487 2,851,418Accrued salaries and payroll taxes 2,065,063 2,560,195Deferred compensation 2,007,147 -

Total Current Liabilities 39,665,089 35,774,622

LONG-TERM LIABILITIES

Deferred rent liability 2,722,879 2,960,734Deferred compensation – long-term 56,038 1,336,565

Total Long-Term Liabilities 2,778,917 4,297,299

Total Liabilities 42,444,006 40,071,921

NET ASSETS – UNRESTRICTED 159,780,258 119,604,836

TOTAL LIABILITIES AND NET ASSETS $202,224,264 $159,676,757

The accompanying Notes are an integral part of these statements.


P R O J E C T M A N A G E M E N T I N S T I T U T E A N D S U B S I D I A R I E SC O N S O L I D A T E D S T A T E M E N T S O F A C T I V I T I E S

FOR THE YEARS ENDED DECEMBER 31,

2010 2009

PROGRAM REVENUES

Brand Management $13,187,980 $13,430,008Product Management 64,655,295 67,641,031Regional Development 172,267 180,924Market and Business Development 40,054,940 38,210,456Finance and Administration 18,913,047 21,603,036

Total Revenues 136,983,529 141,065,455

PROGRAM EXPENSES

Brand Management 20,282,606 22,587,090Product Management 39,054,108 38,024,585Information Technology 404,066 608,026Regional Development 3,960,754 3,747,850Market and Business Development 22,919,048 18,432,706Finance and Administration 6,260,674 9,632,684

Total Program Expenses 92,881,256 93,032,941

GOVERNANCE 1,042,153 1,149,392

EXECUTIVE 2,884,698 3,640,062

Total Expenses 96,808,107 97,822,395

CHANGE IN UNRESTRICTED NET ASSETS 40,175,422 43,243,060

NET ASSETS – BEGINNING OF YEAR 119,604,836 76,361,776

NET ASSETS – END OF YEAR $159,780,258 $119,604,836



P R O J E C T M A N A G E M E N T I N S T I T U T E A N D S U B S I D I A R I E SC O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S

FOR THE YEARS ENDED DECEMBER 31, 2010 2009

CASH FLOWS FROM OPERATING ACTIVITIES

Change in unrestricted net assets $40,175,422 $43,243,060Adjustments to reconcile change in unrestricted net assets to net cash:

Depreciation and amortization 7,724,613 7,917,536Realized (gain) loss on investments (2,121,066) 2,530,956Unrealized gain on investments (11,644,869) (19,895,420)Loss and (recovery) of sales and abandonment of property and equipment 891,939 (51,082)Recovery of provision for uncollectible accounts (187,978) (10,146)Deferred rent liability (237,855) (203,080)Gain on translation adjustments (23,239) (11,972)(Increase) decrease in assets

Accounts receivable (77,942) 934,165Inventory 183,113 (129,029)Prepaid expenses 13,266 722,456Deposits and other assets 121,807 (66,881)Due from related party 33,115 107,345

Increase (decrease) in liabilitiesAccounts payable 1,385,149 (2,161,895)Unearned revenue 2,884,212 610,884Accrued salaries and payroll taxes (499,571) 294,901Accrued expenses (1,905,163) (725,501)Deferred compensation 726,620 402,514

Net Cash Provided by Operating Activities 37,441,573 33,508,811

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of investments (96,215,476) (47,299,937)Proceeds from sale of investments 60,781,176 29,117,143Purchase of property and equipment (5,071,869) (5,094,450)Proceeds from sale of property and equipment 26,533 28,075

Net Cash Used in Investing Activities (40,479,636) (23,249,169)

EFFECT OF UNREALIZED EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 20,071 11,986

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (3,017,992) 10,271,628

CASH AND CASH EQUIVALENTS – BEGINNING OF YEAR 15,130,396 4,858,768

CASH AND CASH EQUIVALENTS – END OF YEAR $12,112,404 $15,130,396



N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T SF O R T H E Y E A R S E N D E D D E C E M B E R 3 1 , 2 0 1 0 A N D 2 0 0 9

NOTE A – Summary of Significant Accounting Policies

Business Activity — Project Management Institute (the “Institute”) is a global association working to improve project and program performance by serving a wide range of stakeholders (project managers, team members, constituents, students and educators) in all applications, areas and cultures. The Institute’s headquar-ters are located in Pennsylvania. In addition, the Institute oper-ates internationally through contract service centers located in Brussels, Delhi and Singapore as well as subsidiaries located in Mumbai, Sydney, and Beijing. Project Management Institute is affiliated with domestic and international chapters, specific interest groups and colleges. Chapters, specific interest groups and col-leges are all separate, independent operating entities, and there-fore, the financial statements do not include the accounts of these operating entities.

Principles of Consolidation — The consolidated financial statements include accounts of PMI Organization Centre Private Ltd, a major-ity-owned subsidiary in Mumbai, Republic of India (“India”); PMI (Beijing) Project Management Technology Co., Ltd, a wholly-owned foreign enterprise in Beijing, People’s Republic of China (“China”), which has a limited contractual obligation of twenty years; and Project Management Institute Australasia PTY LTD, a proprietary limited company in Sydney, Australia. All significant intercompany transactions and balances have been eliminated in consolidation.

Foreign Currency Translation — The functional currencies of the Institute’s foreign subsidiaries are their local currencies, Indian Rupees, Chinese Renminbi and Australian Dollars. All statements of financial position accounts have been translated using the exchange rate in effect at the statements of financial position dates. Statements of activities amounts have been translated using a monthly average exchange rate prevailing during the respective period.

Basis of Presentation — The Institute reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. The Institute’s wholly owned foreign enterprise in Beijing, China is required to appropriate not less than 10% of its profit after tax for employee welfare benefit usage according to foreign invested enterprises law in the People’s Republic of China. Annual appropriation of earnings is required until the accumulated restricted earnings balance is at least 50% of the registered capital of the Company. Net assets restricted under this rule were $35,363 and $11,756 as of December 31, 2010 and 2009, respectively, and have not been reflected as either temporar-ily or permanently restricted net assets because such amounts are not material to the financial statements.

Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value Measurements — Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transactions between market participants at the measure-

ment date. Accounting standards set a framework for measuring fair value using a three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market.Level 1: Quoted prices in active markets for identical assets or liabilities.Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or inputs (interest rates, currency exchange rates, commodity rates and yield curves) that are observable or corroborated by observable market data for sub-stantially the full term of the assets or liabilities.Level 3: Inputs that are not observable in the market and reflect management’s judgment about the assumptions that market par-ticipants would use in pricing the asset or liability.

Cash and Cash Equivalents — For the purpose of the statements of cash flows, cash equivalents include all highly liquid invest-ments with an initial maturity of three months or less that are not held in a brokerage account for reinvestment. The carrying amounts approximate fair value because of the short maturity of those financial instruments.

Investments — The Institute carries all investments in marketable securities at fair value, based on quoted prices in active markets (Level 1 measurements), in the statements of financial position. Unrealized gains and losses are reported in the change in net assets. All marketable securities at December 31, 2010 and 2009 are managed by an investment advisor.

Accounts Receivable — Accounts receivable are stated at the amount management expects to collect from balances outstand-ing at year end. Based on management’s assessment of the credit history and current relationships with customers having outstanding balances, it has concluded that losses on balances outstanding at year end will be immaterial. The allowance for uncollectible accounts was $126,877 and $314,854 at December 31, 2010 and 2009, respectively.

Inventory — Inventory consists of Institute publications, commer-cial publications and gift items held for sale. Inventory is stated at the lower of cost or market, average cost method.

Property and Equipment — Capital additions are stated at cost. Maintenance, repairs and minor renewals are charged to opera-tions as incurred. Depreciation is provided over the estimated useful lives of the assets by the straight-line method. The esti-mated useful lives are buildings and improvements 5 to 40 years; office furniture and equipment 5 years; computer equipment 3 to 5 years and leasehold improvements 5 to 10 years, over the term of the lease.

Software Development Costs — The Institute expenses costs associated with the planning phase as well as costs related to the operating phase that do not significantly enhance the software. Costs incurred during the development stage are capitalized and amortized over three years. Capitalized software development costs at December 31, 2010 and 2009 were $26,481,761 and $25,139,813, respectively.

Revenue Recognition — Membership dues are recorded in income commensurate with the term of the membership. Certification fee revenue is recognized as services are provided. Advertising revenues are recognized as income in the period of



publication. Revenues are reported net of sales taxes.

Advertising — The Institute uses advertising to promote its programs among the audiences it serves. Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2010 and 2009 was $952,560 and $597,635, respectively.

Income Taxes — The Institute is exempt from U.S. federal income taxes under Section 501(c)(6) of the Internal Revenue Code. The Institute is also exempt from Pennsylvania income taxes. Revenue generated from advertising and sales of membership mailing lists are not considered program activity revenue by the Internal Revenue Service. This type of income is classified as unrelated business income and may be subject to income tax. For the years ended December 31, 2010 and 2009, there was no net income and no unrelated business income tax due.

The federal income tax returns of the Institute for 2007, 2008 and 2009 are subject to examination by the federal, state and local taxing jurisdictions, generally for three years after they were filed.

Concentration of Credit Risk — As of December 31, 2010 and 2009, the Institute held checking accounts and money market funds in excess of federally insured limits. The Institute has not experienced any loss in these accounts. As of December 31, 2010 and 2009, the uninsured balance was $13,800,000 and $16,500,000, respectively. Management believes it is not exposed to any significant credit risk on its cash balances.

Functional Classification of Expenses — The costs of providing the various programs and other activities have been summarized on a functional basis. Accordingly, the expenses directly related to the program are combined with allocations of certain common costs of the Institute which have been allocated based on esti-mates made by management. Program activities include Brand Management, Product Management, Regional Development and Market and Business Development. Supporting services include Information Technology, Finance and Administration, Governance and Executive.

Reclassifications — Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

NOTE B – Investments

At December 31, 2010, all investments are stated at fair value based on quoted market prices in active markets for identical securities (Level 1 measurements) and are summarized as follows:

Cost Fair Value

Money Market Funds held for reinvestment $4,387,512 $4,387,512Certificate of Deposit 135,816 135,816Stocks 37,101,724 43,723,172Government Bonds 14,564,551 14,798,475Mutual Funds 98,349,413 104,030,390

Total $154,539,016 $167,075,366

The following schedule summarizes investments as of December 31, 2010:US Equities 36%International Equities 11%Fixed Income 43%Real Estate Investment Trust 2%Cash and Equivalents 4%Other 4%

100%

At December 31, 2009, all investments are stated at fair value based on quoted market prices in active markets for identical securities (Level 1 measurements) and are summarized as follows:

Cost Fair Value

Money Market Funds held for reinvestment $1,859,632 $1,859,632Certificate of Deposit 103,285 103,285 Stocks 25,545,353 28,268,934 Government Bonds 9,318,115 9,737,925 Mutual Funds 80,152,749 77,900,839

Total $116,979,134 $117,870,615

Long-term assets reported in the statements of financial position include government bonds of $9,845,028 and $2,838,688 as of December 31, 2010 and 2009, respectively, with maturity dates in excess of one year, and are included in the detail of investments stated at fair value shown above.

The following schedule summarizes the components of investment return which are contained in Finance and Administration revenues reported in the statements of activities:

For the Years Ended December 31,

2010 2009

Interest and dividend income $4,611,939 $3,639,571Net unrealized gain 11,644,869 19,895,420Net realized gain (loss) 2,121,066 (2,530,956)

Total Investment Income $18,377,874 $21,004,035

Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably pos-sible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the consolidated statement of financial position.

NOTE C – Accounts Payable

Accounts payable include amounts due to local chapters for dues collected by the Institute on their behalf. Amounts due to chapters as of December 31, 2010 and 2009 were $791,194 and $891,487, respectively.

Accounts payable also include amounts due to specific interest groups (SIGs) and colleges for dues collected by the Institute on their behalf. Amounts due to these groups as of December 31, 2010 and 2009 were $21,993 and $61,899, respectively.



NOTE D – Unearned Revenue

December 31,

2010 2009

Unearned membership dues $19,774,369 $17,977,917

Unearned certification test fees 6,145,050 5,524,850

Unearned registered education provider fees 931,354 908,160

Advance seminar registration fees, booth sales and others 1,213,064 768,698

Total $28,063,837 $25,179,625

NOTE E – Financial Instruments

Generally Accepted Accounting Principles requires disclosure of an estimate of fair value of certain financial instruments. The Institute’s significant financial instruments are cash and cash equivalents, accounts receivable, investments, and other short- term assets and liabilities. For these financial instruments, carrying values approximate fair value.

NOTE F – Non U.S. Operations

Operations outside the United States are currently conducted by subsidiaries in Mumbai, India, Beijing, China and Sydney, Australia. Foreign operations are subject to risks inherent in operating under different legal systems and various political and economic environ-ments. Among the risks are changes in existing tax laws, possible limitations on foreign investment and income repatriation, govern-ment price or foreign exchange controls, and restrictions on curren-cy exchange. Net assets of foreign subsidiaries are less than 1% of the Institute’s total net assets and consist mainly of cash and prop-erty and equipment less accounts payable and accrued expenses.

The wholly-owned foreign subsidiary (WOFE) in China initially had a requirement to fund $2,500,000 USD in registered capital. Approximately $650,000 of capital was paid during 2009 with the remaining balance due no later than November 28, 2010. During 2010, the Institute filed an application with the local business license administration authorities to reduce the original registered capital requirement to $650,000. The application was accepted in 2010, and as a result, no further funding is required.

NOTE G – Income Taxes

The Institute has a 99.9% interest in a foreign for-profit subsidiary, PMI Organization Centre Private Ltd, Mumbai, India. In addition, the Institute has a wholly-owned foreign enterprise, PMI Project Management Technology Co., Ltd, Beijing, China; and Project Management Institute Australasia PTY LTD a proprietary limited company in Sydney, Australia. The Institute has elected to treat the foreign subsidiaries as pass-through entities for US income tax purposes. The earnings from the investments in the subsidiaries are included in taxable income in a manner consistent with the financial reporting results. The majority of the earnings of the subsidiaries are derived through a cost plus fee arrangement with the Institute. The terms of the fee arrangements were established by two independent transfer pricing studies. All of the earnings are wholly related to the tax exempt purpose of the Institute and are, therefore, not subject to unrelated business income tax in the United States.

The provision for taxes on income earned in India and China are reported in the accompanying consolidated statements of activi-ties in Regional Development program expenses and consists of the following:


2010 2009

Current provision $191,363 $123,058

Deferred benefit (7,220) (9,322)

Provision for Income Taxes $184,143 $113,736

The net deferred tax assets are reported in the accompanying consolidated statements of financial position in deposits and other assets and include the following components:

December 31, 2010 2009

Current deferred tax asset $18,044 $12,654

Noncurrent deferred tax asset (liability) 1,746 (520)

Total Deferred Tax Assets $19,790 $12,134

Deferred income taxes result from transactions which are recog-nized in different periods for financial and tax reporting purposes and relate primarily to the period of deduction for certain accrued expenses and different depreciation methods. Deferred income taxes are recognized for the tax consequences of these differ-ences by applying enacted statutory rates expected to be in effect when taxes are actually paid or recovered.

Cash paid for foreign income taxes for the years ended December 31, 2010 and 2009 were $201,266 and $77,097, respectively.

NOTE H – Foreign Currency Translation Adjustments

Foreign currency translation adjustments associated with consolidat-ing the accounts of the Institute’s majority-owned for-profit subsidiar-ies are reported in the consolidated statements of activities. The amount of accumulated translation adjustments are included in unre-stricted net assets in the consolidated statements of financial position.

The accumulated foreign currency translation adjustments are as follows:


2010 2009

Balance at beginning of year $(48,181) $(60,153)

Foreign currency translation adjustments gain 23,239 11,972

Balance at end of year $(24,942) $(48,181)

NOTE I – Related Party Transactions

The Institute contracts with individual members of the Institute to



conduct seminars or training sessions, or to contribute to or write books for the Institute.

The amounts paid to the above for the years ended December 31, 2010 and 2009 are as follows:

2010 2009

Honorariums $142,600 $108,645

Royalties 19,523 24,816

The Institute provides administrative services to the PMI Educational Foundation (PMIEF) and charges a management fee for these administrative services. The fee was $342,446 and $319,832 for the years ended December 31, 2010 and 2009, respectively. The Institute also gives in kind donations to PMIEF. The in kind donations for facilities, information technology and human resource costs were $124,000 and $0 for the years ended December 31, 2010 and 2009, respectively.

As of December 31, 2010 and 2009, the net amount due from the PMIEF for expenses paid less monies collected on behalf of the PMIEF were $0 and $33,115, respectively, and reported as Due From Related Party in the consolidated statements of financial position.

In 2006, the Project Management Institute Board of Directors approved a $2,000,000 leadership gift payable in three install-ments to the Foundation. In 2009, the Project Management Institute Board of Directors approved a $100,000 gift for the Building Better Futures Campaign payable in 2010. In 2010, the Project Management Institute Board of Directors approved a $150,000 unrestricted donation payable by 2011. As of December 31, 2010, $2,235,905 of the gifts have been paid and the remaining portion of $14,095 is included in accrued expenses as of December 31, 2010.

The Institute is in the process of dissolving its Specific Interest Groups (SIGs) and Colleges. These entities, which are sepa-rately incorporated and chartered, are being transitioned into the Institute’s operations. Charters for the majority of these entities were retired as of December 31, 2010. Effective for 2011, the Institute will assume responsibility for providing core operational support services for these communities, which will operate pri-marily in a virtual environment. Volunteers will continue to provide leadership and support by assessing the knowledge needs of these virtual communities and assist in delivering this knowledge and content to the users.

NOTE J – Commitments and Contingencies

The Institute has operating lease agreements for office space located in Pennsylvania, USA, Beijing, China, Sydney, Australia, Mumbai and New Delhi, India and Washington DC which obliga-tions end between 2011 and 2018.

In prior years, the Institute entered into a 10-year lease for new office space for total lease payments of approximately $18,600,000 with annual minimum lease payments increasing annually from $1,700,000 to $2,000,000 per year. The lease agreement included a rent holiday of three months and provi-sion for renewal periods at the Institute’s option. The Institute recorded amounts related to rent holiday periods, scheduled rent

increases and a tenant improvement allowance of $2,150,000 as deferred rent liability. The Institute amortizes the deferred rent on a straight-line basis over the lease term beginning with the date the Institute took possession of the leased space.

Additionally, the Institute has lease agreements for various office equipment.

The primary component of the Institute’s future obligations sum-marized below is the office rent expense for GOC headquarters located in Newtown Square, Pennsylvania. The summary of the minimum future obligations related to the office space and office equipment leases for each of the fiscal years ending December 31 is presented below:

Rent expense for office space and equipment was $1,907,940 and $2,132,862 for the years ended December 31, 2010 and 2009, respectively.

The Institute enters into contracts with various hotels for blocks of rooms for future events. The commitments require the Institute to pay an attrition fee if the actual number of room nights used by the Institute is less than an agreed-upon percentage of the initial room occupancy. The attrition fee represents the hotel’s exclu-sive remedy for the Institute’s failure to generate the agreed-upon room block revenue and shall only be paid after management’s review and approval.

NOTE K – Leasing Activities

The Institute leases office space to a tenant under a noncancel-able operating lease. Rental income for December 31, 2010 and 2009 totaled $615,065 and $573,170, respectively.

The following is a schedule, by year, of future minimum rentals under the lease as of December 31, 2010:

2011 $531,838

2012 517,833

2013 175,267

Total $1,224,938

NOTE L – Loss on Abandonment

During 2010, management determined that certain developed software for online communities was obsolete based on recent functionality deployed for the organization’s new Communities of Practice. In accordance with “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Institute recognized an impairment loss of approximately $809,000. The impairment loss is included in Market and Business Development expenses in the statement of activities.

Year Amount

2011 $2,263,940

2012 1,937,392

2013 1,917,338

2014 1,942,589

Year Amount

2015 $1,969,090

2016 1,979,049

2017 2,013,820

2018 168,060



2 0 1 0 R E V E N U E / 2 0 1 0 D U E S E X P E N S E

2010 REVENUE

2010 DUES EXPENSE

Career Management: 57%Certification, Professional Development, Accreditation, Congresses

Member & Organizations: 32%Membership

Publications: 18%PM Network®, Project Management

Journal®, PMI Today®

Research: 5%

Membership Services: 17%Application Processing,

Member Organization O/H

Component Support: 18%Leadership Meetings, Leadership Institute, Leadership Development, Staff Salaries, Benefits and Travel

Indirect Expenses: 20%Research (Business Development), Governance, Standards, Knowledge & Wisdom

Advocacy: 18%Media Outreach, Policy Audits, Business Roundtables

Member Benefits: 4%PMBOK® Guide – Fourth

Edition, Member Attrition and Retention Studies

Knowledge & Delivery: 9%Publications,

K&W Center, Standards

Brand Management: 2%Brand Development, Supplier Relations, PR

NOTE M – Retirement Plans

The Institute has a defined contribution pension plan for the benefit of its employees. Under the plan, a contribution based on compensation is made for each covered employee. The plan allows employees to make elective salary deferrals and the Institute will make matching contributions based on the employ-ees’ elective salary deferrals. For the years ended December 31, 2010 and 2009, the Institute contributed $1,179,235 and $1,041,004, respectively, to the plan.

The Institute has deferred compensation plans for its Emeritus President & Chief Executive Officer (CEO) and its current President & CEO which vest on September 30, 2015 and October 31, 2011, respectively, conditional on their continuous employ-ment through that date. The liability for this benefit is $1,955,816 and $1,256,365 at December 31, 2010 and 2009, respectively. In

2010 and 2009, the Institute recognized $699,451 and $313,816, respectively, in compensation expense related to the plan.

The Emeritus CEO employment agreement terminated on January 15, 2011. As a result, benefits under the plan vested and the final deferred compensation amount was recalculated on the basis of his length of service at termination. This final benefit amount of $1,258,489 is included in the liability at December 31, 2010, and was paid in the form of a lump sum distribution on February 18, 2011.

NOTE N – Subsequent Events

In preparing these financial statements, management has evaluat-ed events and transactions for potential recognition or disclosure through April 13, 2011, the date the financial statements were available to be issued.

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